Florida Mortgage Rate Forecast – September 1, 2010

by Florida's #1 Mortgage Planner on September 1, 2010

Locking Stance:  LOCKING     Mortgage Bonds:  -34bp

Mortgage backed securities are once again heading down and bringing “fear” back into the equation.  Things were looking bad as the day began, but nothing compared to what the final bit of data brought on and, just as was stated in yesterday’s radio show, this week’s data is truly shaping the future of mortgage rates.

The day started off with the MBA Purchase Application report which showed Purchase Applications rose 1.8% and Refinance Applications rose 2.8%.  While it is certainly nice to see positive numbers for a change, remember that these numbers are from severely depressed beginnings.  Next up on the list was the ADP Employment Report which forecasts (typically inaccurately) what lies ahead in Friday’s Jobs Jamboree.  This morning’s ADP Employment Report estimates Private Payrolls coming in at –10,000, which is actually better than what was expected, but still not much of a surprise and MBS prices did not move much as a result.  The final data play for the day was just released about ten minutes ago, the ISM Manufacturing Index which threw a huge surprise into the mix and MBS prices are plummeting as a result.  The ISM Manufacturing Index  came in at 56.3, well above estimates of 53.0 and moved up from last report’s 55.5, moving in the opposite direction of what was expected.  You can expect some volatility as the “dust settles”, but this is certainly not good for MBS prices and mortgage rates.  We have Crude Inventories coming up, though it is not a player usually.  We also have Elizabeth Duke and Richard Fisher speaking in a while, so their words may make some waves as the day progresses.

Looking at the charts, this move lower negates the gains of yesterday and puts MBS prices back below the higher resistance layer and right at the lower one.  For mortgage rates to remain low, this lower resistance will have to prove itself to be support, so time will tell.  Stochastic indications remain positive, but are rapidly approaching the top of the overbought spectrum, so this move lower may be indicative of what lies ahead.  Again, it will take a day or two, certainly with all the data coming the next two days, the trend will be solidified and we will see if new record low mortgage rates can be set, or if it is time for mortgage rates to stabilize, if not move higher.

What does this mean for Florida Mortgage Rates?  Mortgage rates are edging higher after some positive economic data and that moves the risk/reward ratio back to unfavorable.  The trend is not broken yet, but some serious concerns are “in the air”.

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